Friday, December 14

SA buyers should be eyeing the UK market

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South Africans without UK residency or British passports can take advantage of lower property prices by buying property there with a bond.

The property market in the United Kingdom has come under pressure, and even South Africans without residency in that country or British passports can take advantage of lower property prices by buying property there with a bond.

Furthermore, there are a number of lenders who offer credit to South Africans even if they have a complex income structure, where they are using family trusts or are self-employed and rely on putting expenses through the business to keep their taxable income quite low.

There are, however, also challenges, says Sable International’s mortgage advisor, Ian Henning.

These include the fact that South African buyers are not living in the UK already and are thus limited by the number of lenders available to them.

“As a non-resident, you can’t look at using lenders who are based inside the UK because UK lenders who are offering buy-to-let mortgages tend to want you to be a resident in the UK and have a UK taxable income.”

But South African residents can use lenders based in the Isle of Man, Jersey or Guernsey, or at certain private banks that have wider underwriter remits, allowing them to look at clients on a global scale. 

These institutions can then take into account buyers with income outside the UK. Obviously, South Africans who do have British passports have a wider choice of lenders, Henning says.

A buyer should carefully consider the deposit they need to put down on a property as even though they may be able to obtain a 60% to 75% loan to value mortgage, this is still “a substantial deposit” when the funds are coming from South Africa.

Nonetheless, Hennings says: “It’s still a good investment option right now. The UK property market has come under pressure and prices have softened.”

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